What’s the Outlook for ESG Investing in Latin America?
Asset managers around the world are expected to increase investment levels in holdings related to environmental, social and corporate governance, or ESG, to $33.9 trillion by 2026, up from $18.4 trillion in 2021, PwC said in a report last October. ESG products globally are gaining market share, including in Latin America, where they account for $25 billion in assets under management, the report said. What is the outlook for ESG investment in Latin America this year as the region, according to the International Monetary Fund, faces slowing economic growth and weakening consumer and business confidence? To what extent will ESG investments continue to grow in importance as the region? How are political factors in the region affecting ESG investments and to what extent is a backlash from conservative politicians in the United States over ESG investments echoing in Latin America?
Devry Boughner Vorwerk, member of the Advisor board and CEO of DevryBV Sustainable Strategies: “While Latin America is pegged for weaker growth in 2023, JP Morgan’s annual outlook deemed the region a ‘(relative) bright spot’ for investors. No matter the year-on-year investment climate, ESG will continue to play a prominent role in the region. Investors do not disregard assessment of ESG risks when the economy takes a dip. It doesn’t work that way. ESG risk factors are high in the LAC region, and investors are looking to mitigate risks by calling them out and either ignoring risky investments (known as ‘negative screening’) or investing in companies that deploy strong ESG frameworks and policies to manage the risks. Last December, S&P Global Market Intelligence published a report identifying the three main drivers of…”Read More
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